U.S. v. MOGLIA

United States District Court, N.D. Illinois

June 2, 2004.

UNITED STATES OF AMERICA, and PEOPLE OF THE STATE OF ILLINOIS, Plaintiffs; V. ALEX D. MOGLIA, not individually, but as Chapter 7 Trustee for the Estate of Outboard Marine Corp. and its related debtor entities, Defendant

The opinion of the court was delivered by: CHARLES NORGLE, District Judge

OPINION AND ORDER

Before the court is Trustee's Motion for Certification, brought
pursuant to 28 U.S.C. § 1292(b). For the following reasons, the motion is
granted.

I. BACKGROUND

On July 16, 2002, the United States and the State of Illinois
(collectively "the Governments") filed a First Amended Complaint against
Alex D. Moglia, not individually but as Chapter 7 Trustee ("the Trustee")
for the Estate of Outboard Marine Corporation and its related debtor
entities ("the Estate"). The Complaint seeks, inter alia, injunctive
relief to enforce against the Estate alleged regulatory obligations of
the debtor, Outboard Marine Corporation, pursuant to the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901, et seq. ("RCRA") and
injunctive relief to enforce compliance with a Consent Decree entered
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. § 9606 ("CERCLA").

The Trustee filed a motion to dismiss the Complaint, brought pursuant
to Federal Rule of Civil Procedure 12(b)(6), claiming: (1) that the
Estate cannot be forced to comply with RCRA because the Complaint in essence seeks a monetary claim, and (2) that the
Governments are not entitled to injunctive relief as the Estate no longer
owns the facility, which was abandoned pursuant 11 U.S.C. § 554 and
approved by a Settlement Agreement in the bankruptcy court. As to the
first contention, the Governments argued that the Complaint sought
injunctive relief, which is not a dischargeable claim for bankruptcy
purposes. As to the second contention, the Governments argued that
abandonment of the property was irrelevant as section 7003 of the RCRA
allows suit to be brought against "any person (including any past or
present generator, past or present transporter, or past or present owner
or operator of a treatment, storage, or disposal facility) who has
contributed or who is contributing to such handling, storage, treatment,
transportation or disposal. . . ." 42 U.S.C. § 6973(a). According to the
Governments' arguments, Outboard Marine Corporation was a "past or
present owner" under section 7003 of the RCRA, and whether it continued to
own the property was irrelevant. The Governments argued that the
Trustee, as representative of the Estate, cannot be separated from
Outboard Marine Corporation, because under general bankruptcy law the
Trustee "stands in the shoes" of the debtor. Further, the Governments
argued that section 554 of the Bankruptcy Code, 11 U.S.C, § 554, refers
only to abandonment of property and not abandonment of any liability that
may attach as a result of past property ownership.

On September 23, 2003, the court denied the motion to dismiss, holding
that the Complaint put the Trustee on notice that the Governments were
seeking injunctive relief, and cited AM Int'l., Inc. v. Datacard Corp.,
106 F.3d 1342, 1348 (7th Cir. 1997), which held that claims for
injunctive relief under the RCRA do not fall within the definition of a
claim under the Bankruptcy Code, 11 U.S.C. § 101(5). See Minute Order of
of September 23, 2003.

The Trustee filed the instant motion for certification pursuant to
28 U.S.C. § 1292(b), which is fully briefed and before the court. The Trustee seeks to have
the following legal question certified for interlocutory appeal: Whether
a Chapter 7 trustee may be directed under the RCRA to expend funds of a
Chapter 7 estate to clean up real property contaminated by the debtor
pre-petition, when the real property has been abandoned pursuant to
11 U.S.C. § 554 and is no longer property of the bankruptcy estate.

II. DISCUSSION

A. Standard of Decision

The movant seeking the grant of a motion to certify an interlocutory
order for immediate appeal pursuant to 28 U.S.C. § 1292(b) bears a heavy
burden, as only "exceptional circumstances justify a departure from the
basic policy of postponing appellate review until after the entry of
final judgment." Fisons Limited v. United States, 458 F.2d 1241, 1248
(7th Cir.1972), cert. denied 405 U.S. 1041 (1972). The statutory text of
28 U.S.C. § 1292(b) provides, inter alia:

When a district judge, in making in a civil action an
order not otherwise appealable under this section,
shall be of the opinion that such order involves a
controlling question of law as to which there is
substantial ground for difference of opinion and that
an immediate appeal from the order may materially
advance the ultimate termination of the litigation, he
shall so state in writing in such order.

"There are four statutory criteria for the grant of a section 1292(b)
petition to guide the district court: there must be a question of law, it
must be controlling, it must be contestable, and its resolution must
promise to speed up the litigation." Ahrenholz v. Bd. of Trustees of the
Univ. of Ill., 219 F.3d 674, 675 (7th Cir. 2000) (emphasis in original).
"There is also a nonstatutory requirement: the petition must be filed in
the district court within a reasonable time after the order sought to be
appealed." Id. at 675-76 (citing Richardson Electronics, Ltd. v. Panache
Broadcasting of Pennsylvania, Inc., 202 F.3d 957, 958 (7th Cir. 2000)).
All of these criteria must be satisfied in order to certify an interlocutory order for immediate appeal. See id. at 676 ("The criteria
are conjunctive, not disjunctive."): see also In re Hamilton. 122 F.3d 13,
14 (7th Cir. 1997) (emphasizing proper standard of decision under
28 U.S.C. § 1292(b)).

B. Analysis of 28 U.S.C. § 1292(b) Criteria

1. Question of Law

The first statutory criterion under § 1292(b) is that there must be a
question of law. In Ahrenholz, the Seventh Circuit provided a definition
of "question of law," stating that a "`question of law' as used in
section 1292(b) has reference to a question of the meaning of a statutory
or constitutional provision, regulation, or common law doctrine" 219 F.3d
at 676, The Seventh Circuit then emphasized that the framers of § 1292(b)
intended the term "question of law" to refer to "`pure' question[s] of
law rather than merely to an issue that might be free from a factual
contest." Id. at 676-77. The Seventh Circuit referred to orders denying
immunity defenses as the paradigmatic example of such a "question of
law." Id. at 677 (citing Johnson v. Jones, 515 U.S. 304, 317 (1995)).

With regard to the instant opinion, the court finds that Trustee
presents such a paradigmatic example of such a "question of law." The
legal question of whether a Chapter 7 trustee may be directed under the
RCRA to expend funds of a Chapter 7 estate to clean up abandoned real
property contaminated by the debtor pre-petition is in the nature of an
immunity defense, and as such is a pure question of law.

2. Controlling

The second statutory criterion under § 1292(b) is that the question of
law must be controlling. A question of law is controlling "if its
resolution is quite likely to affect the further course of the
litigation, even if not certain to do so." Sokaogon Gaming Enter. Corp.,
v. Tushie-Montgomery Assocs., Inc., 86 E3d 656, 659 (7th Cir 1996).

With regard to the instant opinion, the court finds that the question
of law is controlling. If Trustee is immune from suit under the RCRA, the
case against him must be dismissed.

3. Contestable

The third statutory criterion under § 1292(b) is that the question of
law must be contestable, i.e., that substantial grounds for a difference
of opinion on the issue exist. A question of law is contestable if there
are substantial conflicting decisions regarding the claimed controlling
issue of law, or the question is not settled by controlling authority and
there is a substantial likelihood that the district court ruling will be
reversed on appeal. See Smith v. City of Chicago, No, 94 C 920, 2003 WL
1989612, *1 (N.D. Ill. April 28, 2003).

The Trustee argues that the question of whether a Chapter 7 trustee may
be directed under the RCRA to expend funds of a Chapter 7 estate to clean
up abandoned real property contaminated by the debtor pre-petition, is a
matter of first impression. In response, the Governments argue that no
substantial ground for a difference of opinion exists in light of the
statutory text of the Solid Waste Disposal Act, 42 U.S.C. § 6973(a), and
section 554 of the Bankruptcy Code, 11 U.S.C. § 554, dealing with
abandonment. The Governments' argument  that 11 U.S.C. § 554 refers only
to abandonment of property and not abandonment of any liability that may
attach as a result of past property ownership  is well-reasoned and
placates the competing aims of bankruptcy and environmental law; however,
the Governments have provided no direct authority on the issue as framed
by the Trustee.

While the court denied the motion to dismiss based on the applicable
notice pleading standard under Federal Rule of Civil Procedure 12(b)(6),
the court has not found any controlling authority directly addressing the issue as framed by the Trustee,
and as such, the issue is contestable.

4. Speed Up the Litigation

The fourth statutory criterion under § 1292(b) is that resolution
of the question of law "may materially advance the ultimate termination
of the litigation." 28 U.S.C. § 1292(b).

With regard to the instant opinion, the court finds that resolution of
the question of law "may materially advance the ultimate termination of
the litigation," If the court's order denying the motion to dismiss was
erroneous, the Trustee would be immune from suit under the RCRA, and the
case would be dismissed.

5. Timeliness of Motion to Certify

The instant motion was filed within one week of the court's order of
which certification of appeal is sought, and as such the motion is
timely.

III. CONCLUSION

For the foregoing reasons, the Trustee's motion for certification
pursuant to 28 U.S.C. § 1292(b) is granted. The following issue meets
the requirements of 28 U.S.C. § 1292(b): Whether a Chapter 7 trustee
may be directed under the RCRA to expend funds of a Chapter 7 estate to
clean up real property contaminated by the debtor pre-petition, when the
real property has been abandoned pursuant to 11 U.S.C, § 554 and is
no longer property of the bankruptcy estate. Therefore, the court's order
of September 23, 2003 is certified to the Seventh Circuit Court of
Appeals for interlocutory review.

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